Rules to implement federal legislation called the Corporate Transparency Act were announced by the federal government on September 29, 2022. Those rules require all corporations, limited liability companies (LLCs), and limited partnerships formed in the United States to report the personal information of every individual who owns at least 25% of, or exercises “substantial control” over, each corporation, LLC or limited partnership.
Nathan Hannah, Attorney
This new reporting regime has received virtually no attention in the general news media. The September 29 press release announcing the new rules was ignored by everyone except accountants and some lawyers, as far as I can tell. The information must be reported to the Financial Crimes Enforcement Network, a bureau of the United States Department of the Treasury.
I won’t try to describe all the details now, but here are the basics of what, when, and how you will have to report:
- What must be reported? Each company will be required to report four pieces of information about its beneficial owners: name, birthdate, address, and a unique identifying number and issuing jurisdiction from an acceptable identification document (and the image of such document).
- When must companies report? All companies created before January 1, 2024, must submit their initial reports no later than January 1, 2025. All companies formed on or after January 1, 2024, will have to report within 30 days after their creation.
- How do companies report? Reporting will be done through forms that will be published by the Financial Crimes Enforcement Network. Those forms have not been released yet.
In addition to the initial reporting requirement, your corporation, limited partnership or LLC will have to file an updated report within 30 days after any change to any of the reported information. That includes not only a change of owners, but any change to any of the identifying information about each of the owners.
Since the existence of all Arizona companies that will be required to report is a matter of public record, through filings with either the Arizona Corporation Commission (for corporations and LLCs) or the Arizona Secretary of State (for limited partnerships), it will at least theoretically be possible for the Department of the Treasury to monitor and enforce compliance with the reporting rules. The press release doesn’t say anything about any anticipated enforcement measures.
The press release does say that the Financial Crimes Enforcement Network “continues to develop… the information technology system that will be used to store beneficial ownership information in accordance with the strict security and confidentiality requirements of the [Corporate Transparency Act].” In other words, they don’t know yet how they are going to securely store the mountain of sensitive information they will be collecting.
Nathan B. Hannah is a Shareholder in the Tucson office, and practices in the areas of estate planning and administration, real estate, and commercial transactions. He is also a noted blogger, and you can find more of his articles on his private blog,
Contact Attorney Hannah: nhannah@dmyl.com or 520/ 322-5000
This communication is designed to bring legal developments of interest to the attention of our clients and others. It should not be relied upon as a substitute for specific legal advice in a particular matter. For further information on any of the subjects discussed, or for legal advice in connection with any particular matter, please contact us.
